Little Green Pharma (ASX: LGP) – focus on medicinal cannabis
COMPANY SCOREBOARD
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ABOUT COMPANY
Little Green Pharma (LGP) (https://www.littlegreenpharma.com/) is a vertically integrated and pure-play medicinal cannabis company operating in Australia and Denmark. The company focuses solely on pharmaceutical-grade cannabis to treat medical conditions.
In March 2021, the company acquired its leased WA cultivation and manufacturing facility for $6m.
In June 2021, the company acquired a fully-operational GACP cultivation and GMP licensed medicinal cannabis asset in Denmark for C$20. It can produce over 20 tonnes of biomass per annum including 12 tonnes per annum of dried cannabis flower. The remaining 50% is to be paid in June 2022. The company realized a $25m book value gain in FY21.
CAPITAL STRUCTURE
| ASX Code | Share Price | Shares | Option (In) | Market Cap | Cash/Asset ($m) |
| LGP | 0.096 | 301760606 | 28969018.176 | 1/77 |
| Holders No | Top 20 (Cur) | Top 20 (Pre) | Director Hold | Performance Right | Note |
| 11723 | 49.47% | 55.78% | 13.07% | 10500000 | last raise $5m@18c; pre raise $4m@20c+25cOpt |
the founder holds 20.3m shares, Gina Rinehart’s Hancock Prospecting holds 26.7m shares (mostly at 60c), and Tiga holds 25m shares, altogether makes up 27% of the total capital.
BUSINESS
Below is the company past five years’ performance
| LGP | 2023 | 2022 (9 month) | 2021 | 2020 | 2019 |
| Operation Revenue | 19568 | 10280 | 7004 | 2204 | |
| Cost of Sale | -9729 | -6329 | -2761 | -1085 | |
| Gross Revenue | 9839 | 3951 | 4243 | 1119 | 0 |
| Gross Margin | 0.5028 | 0.3843 | 0.6058 | 0.5077 | 0 |
| Overheads | -17271 | -22293 | -8208 | -7744 | |
| Fixed Overheads | |||||
| Variable Overheads | |||||
| Total Operation Expense | -17271 | -22293 | -8208 | -7744 | 0 |
| Operation Profit | -7432 | -18342 | -3965 | -6625 | 0 |
| Other Revenue | 3622 | -1738 | 28716 | -2385 | |
| Interest Expense | -880 | -512 | -52 | -353 | |
| D&A | |||||
| Income Tax | |||||
| Net Profit | -4690 | -20592 | 24699 | -9363 | 0 |
| NOTES | $4.9m Demark commissioning cost | $8.6m Demark commissioning cost | $25m book value gain on Demark purchase |
If its original WA facility with 3 tonnes capacity allows generating $2.2m revenue in FY20, the Denmark facility will at least add another $15m revenue. The question is whether $20m revenue will make the company profitable when the company has been bleeding $8m a quarter including additional $1.5m a year on electricity, expensive R&D initiatives and online store development.
SUMMARY
The company will require another cap raise after paying the remaining balance for the Denmark facility, and the electricity price will temporarily kill the business, but it is the best Cannabis company on ASX.